Forex Weekly Outlook Aug. 17-21 – UK, Eurozone GDP releases show double-digit declines

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The upcoming week will see the UK and the eurozone release consumer inflation data. As well, Japan releases GDP for the second quarter. 

In the Eurozone, German CPI declined by 0.5%, the second decline in three months. The week wrapped up with Eurozone GDP for Q2, with the second read of -12.1% confirming the first reading.

UK unemployment claims were much higher than expected, with a reading of 94.4 thousand. The estimate was 9.7 thousand. Wage growth fell 1.2% in June, marking a second straight decline. GDP reports were mixed. The monthly report showed a gain of 8.7% in June, above the estimate of 8.1%. However, the initial reading for Q2 GDP declined by a staggering 20.4%, reflecting the severe economic impact of Covid-19.

In Australia, there was excellent news from the employment front, as the economy created 114.7 thousand jobs, compared to the forecast of 30.0 thousand.

In the US, consumer inflation was unchanged at 0.6% in July. The core reading improved to 0.6%, up from 0.2% beforehand. There was good news on the employment front, as unemployment claims fell to 963 thousand, down from 1.186 million. This marked the first time that new claims have fallen below the 1-million mark since mid-March, before the spread of Covid-19. Retail sales reports were mixed. The core reading came in at 1.9%, above the estimate of 1.3%. However, the headline read posted a gain of 1.2%, shy of the estimate of 2.0%.
  1. Japanese GDP: Sunday, 23:50. Japan’s economy is officially in recession, with two successive declines in GDP. Analysts are braced for another decline in the second quarter, with a forecast of -7.5%.
  2. RBA Monetary Policy Meeting Minutes: Tuesday, 1:30. The RBA minutes provide details of the policy meeting held earlier this month. At the meeting, the bank maintained rates at 0.25%, where it has been pegged since March. The bank’s rate statement warned that the economic outlook remains highly uncertain in the wake of the Covid-19 pandemic. A dovish tone from the minutes could weigh on the Aussie.
  3. Federal Reserve Policy Meeting Minutes: Tuesday, 1:30. The Federal Reserve has been cautious, maintaining rates close to zero during the current economic crunch. With the US economy showing signs of recovery, it will be interesting to see if Fed policymakers sound bullish about the economy in the minutes. If this is the case, the US dollar could get a boost.
  4. US Unemployment Claims: Thursday, 12:30.  Last week, US jobless numbers fell below the 1-million level and the same is expected in the upcoming release, with a forecast of 990 thousand.
  5. UK Inflation Report: Wednesday, 6:00. The headline reading ticked up to 0.6% in June, up from 0.5% beforehand. The estimate for July stands at 0.5%. Core consumer inflation improved from 1.2% to 1.4% in July, but is projected to slow to 1.3%.
  6. UK Manufacturing PMI: Friday, 8:30. The manufacturing sector is showing slight expansion. The PMI posted a reading of 53.3 in July and the forecast for the initial August read stands at 54.0. The 50-level separates expansion from contraction.
  7. UK Services PMI: Friday, 8:30. The index punched into expansion territory in July, climbing from 47.0 to 56.5. The forecast for the initial reading for August is 57.0. 
  8. Eurozone Inflation Report: Tuesday, 9:00. Inflation climbed rose to 0.3% in June, up from 0.1%. The forecast for July stands at 0.4%. The core reading ticked lower from 0.9% to 0.8% in June. Analysts expect a rebound in July, with an estimate of 1.2%.
  • All times are GMT

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About Author

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.

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